By Faridat Salifu
India is making significant progress toward developing a taxonomy for climate finance, with the framework expected to be finalized within the next six months, according to Economic Affairs Secretary, Ajay Seth.
This initiative is a key part of the country’s broader efforts to enhance capital flows for climate adaptation and mitigation, which will support the nation’s green transition.
Seth revealed that work on the taxonomy is already underway, with the steel ministry having completed its sector-specific taxonomy.
However, a more comprehensive approach, covering all sectors of the economy, is being undertaken. A concept paper outlining this approach has been shared with key stakeholders, and their feedback has been incorporated into the ongoing development process.
To ensure sectoral alignment, committees have been formed for each industry, and Seth anticipates that the full taxonomy will be ready within the next six months.
This initiative follows an announcement by Finance Minister Nirmala Sitharaman in her Budget 2024-25, where she emphasized the importance of developing a taxonomy for climate finance.
The finance minister stated that this move would facilitate greater access to capital for the country’s climate-related projects and help India meet its climate goals.
Beyond climate finance, Seth also discussed the government’s fiscal strategy, highlighting a reduction in borrowing estimates for the upcoming fiscal year.
The government’s net borrowing for FY26 is expected to be lower than the current fiscal year, with gross market borrowings slightly increased. Seth explained that the government’s efforts at fiscal consolidation would soften yields on government securities, leaving more room for the private sector to invest.
This fiscal strategy includes a reduced fiscal deficit target of 4.8 percent of GDP for the current fiscal year, slightly lower than the previous estimate of 4.9%. As government bond yields soften, the fiscal burden of interest payments is expected to be lessened, offering more opportunities for corporate investment in the economy.
The overall goal, Seth emphasized, is to ensure that India’s fiscal and climate strategies align to support sustainable growth, while attracting the necessary capital to fuel the green transition.
Source -business standard .com
